Difference between Statement of Affairs and Balance Sheet

Both the Statement of Affairs and the Balance Sheet represent the assets and liabilities of a business entity as of a specific date. However, there are some significant differences between the two. Let’s find them out in the discussion below. The main difference between the two (Statement of Affairs and Balance Sheet) In contrast to…

Features of Single Entry System, Advantages & Drawbacks

It is well known that the double entry system of accounting is used by the majority of businesses. But sometimes small businesses and professions that cannot afford to hire qualified accountants typically use the single entry system of accounting. They just maintain a cash book and the personal accounts of customers and suppliers under this…

Difference between Single Entry System and Double Entry System

Many times, small businesses frequently fail to maintain a thorough accounting system based on the double entry principle. The businessman is usually satisfied with the bare minimum of facts, such as cash and bank account balances and whether or not he has made a profit or loss. They keep rough or sketchy records that serve…

Difference Between Capital Expenditure and Revenue Expenditure

Following the matching principle of accounting, all revenue items must be matched to their costs so that a correct picture of profit or loss in a year can be ascertained. For this, the classification of capital and revenue expenditure is important. In the below paragraphs, you will get to know the difference between capital expenditure…

Difference Between Cash Book and Pass Book

The majority of commercial transactions are conducted through bank accounts. Transactions with banks are recorded in the bank columns of the cash book by businesses. Likewise, the bank also keeps customer accounts in its ledger, which it provides to customers in the form of a statement or a book called a Pass Book. As a…

Difference Between Cash Book and Cash Account

A cash book and cash account slightly vary from one another in the sense that a cash book is a specifically maintained ledger (subsidiary book) for recording cash transactions whereas a cash account is an account within the ledger. A Cash Book records cash transactions directly whereas a Cash Account is a part of a…

Difference between Sacrificing ratio and Gaining ratio

Difference between sacrificing ratio and gaining ratio When the profit-sharing ratio of the current partners in a partnership firm changes, the requirement for goodwill valuation arises. A change in the profit-sharing ratio results in a gain for one partner and a loss for the other. As a result, the partner who benefits from the new ratio…

Difference between Error of Omission and Error of Commission

Error of Omission and Error of Commission Even though accountants put in their best effort to record transactions in a business’s books, errors are bound to occur. This is especially true for businesses having a large number of day-to-day transactions. Accounting errors, if left unattended, can distort the financial position of a business. Therefore, it…

Difference between Depreciation and Amortization: A comparison

Amortization and depreciation are the two most common methods used for determining the correct value of business assets. Both of them are tax-deductible expenses and reduce the tax liability for an enterprise. Legally also, in the case of joint-stock companies, it is mandatory to provide for depreciation on fixed assets before declaring dividends. In this…